Mortgage rates have risen over the last few years, leading to increased uncertainty regarding affordability within the mortgage market.
Analysing house price data for both cash and mortgage-backed homebuyers, recent data from Octane Capital states that cash buyers in the UK have received more significant discounts on properties comparatively since interest rates began to soar in December 2021.
According to this research, as interest rates started to rise from a historically low level of 0.1%, the average cash buyer in the UK was paying around £255,616 for properties across Britain. This represented a discount of -8.5% compared to the average mortgage-backed house price of £279,220.
In August 2023, the Bank of England revealed that the base rate finally steadied at 5.25%. However, with interest rates remaining high, uncertainty prevailed in the mortgage market as buyers grappled with a constantly shifting lending landscape.
Sellers accepted offers from cash buyers at 9.4% lower than for mortgaged buyers, meaning borrowers paid an average of £301,932 for a property, compared with £273,685 for a cash buyer.
Today, Octane Capital’s data shows that this has increased even further, with a 9.7% discount for cash buyers compared to mortgaged ones, which equates to £268,346 versus £297,185 for mortgaged buyers.
Octane Capital believes that along with the savings from not having to pay mortgage fees and the interest saved, buying with cash could be even more lucrative for those who can afford it.
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